Elon Musk: THIS will be bigger than Tesla
Sponsored
I've been called a “genius investor” by my fans… And an “eccentric millionaire” by some others.
I think it's because I make big predictions… That tend to come true. Today, I'm revealing a brand-new prediction:
American manufacturing will leave China…
And make a triumphant return to America…
Thanks to AI-powered robots.
The technology is being developed right now. I'm talking about, among others… Elon Musk's Optimus robots. These robots are autonomous workers… Embedded with a smart “AI brain”. Musk is going to use thousands of them in Tesla factories… AI robots will make it cheaper to manufacture goods here in America than China. And they'll create new American jobs in construction, maintenance, transportation, management, and more. Musk believes the potential of these robots is almost limitless… And could soon exceed Tesla's revenues… He's even said his robots have the potential to be used in homes… To make dinner and do housework… Care for the elderly… Or even hinted at them… Being a buddy or “romantic companion” for lonely people. Now that may sound strange… (And perhaps it is.) But I've learned not to bet against Musk's vision. And this is just one of the ways AI will transform our economy and society. In fact, I now predict… Between now and January 9, 2024… Next generation AI technology will open a “wealth window”… That could be the biggest wealth-building opportunity of your lifetime. I now expect AI to be the first $100 TRILLION industry. There could be trillions available to those who get in early… Today, for the first time… I'm showing good Americans exactly what to do… Go here now to see my plan… For investing in AI during this brief “wealth window”.
P.S. If you missed out on crypto, this could be your second chance. The AI “wealth window” is opening now, but you must get in before January 9, 2024. Don't delay. See all the details you need here.
Magic Software Enterprises (Nasdaq: MGIC) is the rare software company that has a big yield. Most tech companies don’t pay dividends at all – and of the ones that do, very few have yields above 3%. Magic Software’s current $0.327 per share semiannual dividend comes out to a yield of 6.7%.
But can the Israeli company keep it up?
Over the last four quarters for which we have data (the company has not yet released its fourth quarter results), Magic Software generated $80 million in free cash flow. It paid $30.8 million in dividends over that span for a nice low payout ratio of 39%.
That means the company is paying out just $0.39 in dividends for every dollar in free cash flow, so it can comfortably afford its dividend. (Remember, I use free cash flow rather than earnings to calculate a company’s payout ratio because it’s easier for management to manipulate earnings numbers.)
Magic Software is a small cap stock with a market cap under $500 million. As a result, only two sell-side analysts cover the stock, and they have not published free cash flow estimates for 2024. So we’ll have to make our own assumptions.
Earnings are projected to be flat this year, while revenue is forecast to decline by 10%. Since earnings are expected to be flat and management has not provided any guidance so far, we’ll assume that free cash flow will also be flat.
The company has reduced its dividend a few times in recent years. In 2022, the dividend dipped from $0.234 to $0.216 per share, and in 2020, it was nearly cut in half from $0.156 to $0.08 per share.
All in all, there have been seven cuts in the past 10 years, with the others coming in 2014, 2015, 2016 and 2019. So while the overall trend has been higher, there have been periods when the dividend was reduced for a short time.
The company can easily afford its dividend based on the trailing 12 months numbers, but it has shown a willingness to cut the dividend on a fairly regular basis.
Even if Magic Software sustains its dividend in the near term, I wouldn’t get too comfortable with it.
Dividend Safety Rating: D
This $3 stock is the “trade of the year”
Sponsored
Most investors aren't seeing it, but… There's a new bull market that's quietly raging. Have you ever opened your cell phone with Face ID? Paid for something using your credit card? Jumped in your car and plugged your destination into Google Maps? If so, you've benefited from this “secret megamind” technology… And Ross Givens has just identified his #1 stock pick to ride this revolutionary tech to a potential windfall gain… The likes of which haven't been seen since Microsoft went public in '86. Right now the stock trades for just $3… But according to Ross' research, it could soon explode to obscene levels… And give your retirement a much-needed “booster shot.” You better move quick – click here for the full details right now…